Nominal Codes for Postage/Carriage

We charge our customers carriage (where we can for offline orders) and send our goods out by either next day courier or royal mail 1st class recorded for small items.

Which nominal codes in Sage should we be using for the following:

1. Carriage (sales) we charge our customers ?
2. Next Day Courier (cost) we pay for our next day courier for sending out goods we have sold ?
3. Royal Mail Postage (cost) we pay for sending out goods we have sold ?

Think we have got a bit confused with the above and want to get it right so carriage/postage costs are reported correctly on our profit and loss report.

Carriage on sending goods is a cost of sale. Putting your cost in there will match it against the income from carriage recharged in 4905. You do not have to use 5100 if it is already in use for something else. Create a new code in the 5XXX range to keep carriage costs separate.

7501 is an overhead account, not for direct costs . Use it for carriage unconnected with direct sales, eg getting a new piece of equipment delivered.

My view is that it is a selling cost, not a cost of sales. In the context of a profit and loss account, cost of sales means the costs of purchasing or manufacturing goods that have been sold - i.e. purchases as adjusted for stock.

Carriage inwards is a cost of sales, as it is part of the cost of getting the goods to your premises for sale. That is why code 5100 is in the same range as materials. In practice, I wouldn't even split the carriage cost from the cost of the goods and would post it all to 5000

Carriage outwards is different and is treated as an overhead, in the same way as other selling costs such as advertising, sales salaries, commissions etc. I'd post it to something like 7501.

but carriage outwards for an internet business is an integral part of the sale - and a lot of ebay sellers quote post included prices so it is definitely not an overhead - its part of the cost of the item being sold

post is only an overhead if it is optional to the item being sold
if the sale cannot be made without the post, its COS

Checked and in last years accountant produced end of year accounts this all went against 5100.

I think we will break this out for clarity and keep incoming supplier carriage charges on 5100 and create something new on say 5105 for outgoing carriage/postage.

This keeps 7501 for just general office postage/stamps etc.

The outgoing carriage does feel like a cost of sale as we wouldn't make a sale/satisfy a sale without paying for outgoing carriage and if our sales increase/decrease then generally the outgoing carriage will increase/decrease pro rata (ish).